2020-05-01: Numerical Literacy and the News                  rak
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This morning I was listening to "Ici RDI" (the French television
news arm of of the CBC / Radio-Canada) and was struck by how the
reporting was both misleading and displayed a lack of numerical
literacy.

In the middle of a segment on the economic impact of COVID-19,
the reporter stated without context that according to a new
report from the International Labour Organization (a UN agency),
"50% of workers worldwide are having difficulty meeting their
subsistence needs". Implicit was the claim that this percentage
has increased due to the pandemic.

For this statistic to be meaningful to viewers, it needs to be
given context. What was the percentage before the pandemic?
According to the World Bank, close to 46 percent of the world
population was living on less than $5.50 a day in 2015 [0]. If
the percentage of workers worldwide that had difficulty meeting
their subsistence needs went from 30% pre-pandemic to 50% today,
it would indeed be newsworthy. But for we were told, it could
simply have increased from 40% or 45% to 50%. (I have not been
able to find the referenced ILO report on their website [1].)

Second was a report that wealth inequality was increasing as a
result of the pandemic. To support this, the reporter stated
that the wealth of "billionaires like Jeff Bezos" had risen 10%
in the past month. He reported that the head of (some UN?
organization whose name I didn't quite catch) was astounded that
people weren't striking and protesting as a result.

Whether or not wealth inequality is increasing as a result of
the pandemic, I do not know. The fact that the wealth of
billionaires has increased 10% in the past month is almost
definitely true, but it is neither meaningful nor
interesting. Why? Because the S&P500 lost 34% of its value from
its peak in February to its low in late March and had a return
of 12.7% in April. So of course you saw your net worth rise
about 10% if the majority of your wealth is invested. And if
you're wealthy, the majority of your wealth should be invested.

Being incredulous that people are not striking and protesting is
disingenuous at best. If you want to honestly report the effects
of the pandemic on wealth inequality, you must compare the
current inequality to the pre-pandemic inequality. Seeing that
markets still haven't returned to their all-time highs, I would
wager that the difference in total wealth between the "top 1%"
of Americans and the total wealth of the "bottom 99%" of
Americans is lower now than it was in mid-February. Of course,
this doesn't make nearly as juicy of a story.

[0] https://www.worldbank.org/en/news/press-release/2018/10/17/nearly-half-the-world-lives-on-less-than-550-a-day
[1] https://www.ilo.org/global/lang--en/index.htm
[2] https://www.marketwatch.com/story/after-a-blockbuster-april-for-the-dow-and-sp-500-is-sell-in-may-in-the-coronavirus-era-a-smart-strategy-2020-04-30